Among others, SEBI has directed stock exchanges not to execute orders exceeding Rs10 crore in the normal market
Mumbai: To prevent instances of flash crashes on stock exchanges, Securities and Exchange Board of India (SEBI) came out with stringent norms that require bourses to ensure that brokers implement appropriate risk checks before executing a trade, reports PTI.
"... it has been decided to prescribe a framework of dynamic trade based price checks to prevent aberrant orders or uncontrolled trades," SEBI said in a circular.
The measures come more than two months after a massive 900-point flash-crash of the benchmark stock index Nifty, wiped out nearly Rs10 lakh crore of investor wealth. The flash crash, that happened on 5th October, had halted trading for about 15 minutes.
Among others, SEBI has directed stock exchanges not to execute orders exceeding Rs10 crore in the normal market.
These orders include ones placed on stocks, exchange traded funds (ETFs), index futures and stock futures.
In addition, exchanges have to ensure that appropriate checks for value are implemented by the stock brokers based on the respective risk profile of their clients.
"These measures would be implemented in phases in order to ensure the Indian stock exchanges deploy latest technology while maintaining adequate controls," the circular said.
All the measures are to be implemented within one month of the issuance of circular.
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